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Celgene Corp. v. Hetero Labs Ltd.

United States District Court, D. New Jersey

March 2, 2018

CELGENE CORPORATION, Plaintiff,
v.
HETERO LABS LIMITED, et al., Defendants.

          MEMORANDUM

          Esther Salas, U.S.D.J.

         Pending before the Court is Defendants Mylan Pharmaceuticals Inc., Mylan Inc., and Mylan N.V.'s (collectively, “Mylan” or “Mylan Defendants”) motion to dismiss for improper venue, lack of subject-matter jurisdiction, and failure to state a claim under Federal Rules of Civil Procedure 12(b)(3), 12(b)(1), and 12(b)(6), respectively. (D.E. No. 56). The Court has considered the parties' submissions and decides the matter without oral argument. See Fed. R. Civ. P. 78(b). For the following reasons, Mylan's motion is DENIED without prejudice.

         I. Improper Venue under Rule 12(b)(3)

         a. Legal Standard

         Mylan seeks dismissal for improper venue under Rule 12(b)(3). (D.E. No. 56-1 (“Mylan Mov. Br.”) at 1). Courts are divided on which party bears the burden on a Rule 12(b)(3) motion in a patent case. Compare Galderma Labs., L.P. v. Teva Pharm. USA, Inc., No. 17-1076, 2017 WL 6505793, at *3 (N.D. Tex. Nov. 17, 2017) (plaintiff bears the burden), with Mallinckrodt IP v. B. Braun Med. Inc., No. 17-365, 2017 WL 6383610, at *2 (D. Del. Dec. 14, 2017) (party opposing venue bears the burden); see also 14D Wright & Miller, Federal Practice & Procedure § 3826 (4th ed. 2017) (“There are many cases-predominantly, but not exclusively, from the Third and Fifth Circuits-holding that the burden is on the objecting defendant to establish that venue is improper, because venue rules are for the convenience and benefit of the defendant.”).

         Mylan argues that Federal Circuit law governs the burden-of-proof inquiry. (D.E. No. 110 (“Mylan Reply Br.”) at 6-7).[1] Mylan relies on Federal Circuit precedent that instructs:

a procedural issue that is not itself a substantive patent law issue is nonetheless governed by Federal Circuit law if the issue pertains to patent law, if it bears an essential relationship to matters committed to [the Federal Circuit's] exclusive control by statute or if it clearly implicates the jurisprudential responsibilities of [the Federal Circuit] in a field within its exclusive jurisdiction.

(Id. at 6) (citing Midwest Indus. v. Karavan Trailers, 175 F.3d 1356, 1359 (Fed. Cir. 1999)). According to Mylan, § 1400(b) is a patent-specific statute, which triggers the application of Federal Circuit law. (See Id. at 6-7). And in Mylan's view, Federal Circuit law places the burden as to venue on the plaintiff. (Id. at 7) (citing Hoover Grp., Inc. v. Custom Metalcraft, Inc., 84 F.3d 1408, 1410 (Fed. Cir. 1996)).[2]

         Celgene argues that Third Circuit law governs the burden-of-proof inquiry. (D.E. No. 88 (“Celgene Opp. Br.”) at 3). For support, Celgene relies on several cases, [3] including a post-TC Heartland Hatch-Waxman case from this Circuit. (See id.) (citing BMS, 2017 WL 3980155, at *5 (holding that the law of the regional circuit controls who bears the burden, and explaining that under Third Circuit law, the burden is on the defendant to prove improper venue)).

         After the parties briefed Mylan's motion, other district courts in the Third Circuit followed the reasoning in BMS and applied Third Circuit law to determine-as a procedural matter-which party bears the burden on a venue challenge in a patent case. See Koninklijke KPN N.V. v. Kyocera Corp., No. 17-87, 2017 WL 6447873, at *2 (D. Del. Dec. 18, 2017).[4] The Court will follow the reasoning in BMS and hold that “the issue of which party bears the burden of proof on a venue challenge is a procedural, non-patent issue controlled by the law of the regional circuit.” See 2017 WL 3980155, at *4. Thus, Mylan-as the party opposing venue- bears the burden here. See Great W. Mining & Mineral Co., 434 F. App'x at 86 (3d Cir. 2011).[5]

         b. Analysis

         Venue in a patent case is governed exclusively by a special patent-venue statute, which provides that, “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b); see TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1515 (2017); see also In re Cray, 871 F.3d 1355, 1360 (Fed. Cir. 2017) (holding that “Federal Circuit law, rather than regional circuit law, governs [the] analysis of what § 1400(b) requires.”). Thus, Mylan must demonstrate that (1) it does not “reside” in New Jersey and (2) it either (a) has not committed “acts of infringement” in New Jersey, or (b) does not have a “regular and established place of business” in New Jersey. See BMS, 2017 WL 3980155, at *5-6. In other words, if Mylan “resides” in New Jersey, then venue is proper here. If Mylan does not “reside” in New Jersey, but has committed “acts of infringement” in New Jersey and has a “regular and established place of business” in New Jersey, then venue is proper here.

         1. Does Mylan “Reside” in New Jersey?

         Under § 1400(b), a defendant that is a domestic corporation “resides” only in its state of incorporation. See TC Heartland, 137 S.Ct. at 1517. Mylan asserts that it does not “reside” in New Jersey because none of the Mylan Defendants are incorporated in New Jersey. (Mylan Mov. Br. at 2, 6). Celgene does not appear to challenge Mylan's assertion. (See generally Celgene Opp. Br.) (addressing only second prong under § 1400(b)). The Court has reviewed Mylan's submissions, including the Meckstroth Declaration (D.E. No. 56-2) and the Jenkins Declaration (D.E. No. 56-3), and is satisfied that the Mylan Defendants do not “reside” in New Jersey for purposes of § ...


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